Aon’s and Willis Towers Watson’s (WTW) negotiations with competition and antitrust authorities around the world continue, with the latest reports suggesting that the US Antitrust Division of the Department of Justice has specific demands for divestitures.
After the news began to break recently on the remedy proposal to the European Commission competition department, which recent reports suggest includes a reasonably meaningful amount of divestitures, it’s to be expected that this will now spread, with other countries competition authorities likely to make their own demands.
According to sources, the United States government’s demands of the merger parties are not as onerous as perhaps expected.
When we last reported on the $30 billion proposed combination of Aon and Willis Towers Watson (WTW) it was when the European Commission extended their deadline for a decision on the merger and detailed some of the remedy proposals made to the EC for divestitures from insurance and reinsurance broking units at WTW.
More details on the divestiture package for the EC, a remedy proposal from Aon, are now available and as expected it includes: reinsurance unit Willis Re; a number of WTW European broking units including Gras Savoye in France, Dutch, German and Spanish entities; specific WTW units in FinPro and cyber in the UK; as well as rumours that other countries broking units could be included (Italy, Poland and Portugal); while aerospace manufacturing and space broking teams could also be on the block; and the retirement benefits business of Aon in Germany is also said another potential divestiture.
It’s widely reported that broking group Gallagher is already in discussions, or at least engaged, on the potential to acquire some of the package of remedies from the EC, as too are said to be Howden, Lockton, McGill and possibly others, all kicking the tires to explore what might make sense to acquire.
Investment banking sources said that the US DOJ has laid out some divestiture demands too.
These are said to include WTW Corporate Risk & Broking units in San Francisco, Houston and Miami, as well as the WTW broking business in Bermuda.
These US DOJ divestitures would get nowhere near to the merger cap, so it does seem to us that the US antitrust authorities demands may come on the heels of the EC and also be dependent on that package also being accepted by the merger parties Aon and WTW.
Previously it had been rumoured that the US DOJ would demand the sale of reinsurance broking unit Willis Re, but that isn’t reported to be included in that regulators package.
Which suggests that what we may now see is, negotiations with the EC and potential acquirers over the remedy and divestiture package proceeding first, with the US next, and then perhaps other countries competition authorities set to also chime in with their additional and region specific demands
So that would mean the EC’s package will be the largest and most meaningful divestiture of business, which makes sense given the order these things tend to run in and fits with reinsurance broker Willis Re being included there.
The EC remedy package is said in market testing, with interest and feedback also being elicited from potential acquirers of these businesses and units.
It’s possible the package may need some tweaking to get approved, but the important thing for Aon is that progress is now being rapidly made, which could speed this to a resolution.
Analysts remain convinced that Aon will do what is necessary to close the deal, within reason and that closing sooner rather than later remains its goal.
Due to the time-frame remaining, specialist antitrust and competition issues focused publisher The Capitol Forum has suggested that if the EC still has any objections to the remedy proposal it may need to raise a statement of objections by May 12th, to keep in line with the now July 12th EC review deadline.
– EC extends Aon – Willis Towers Watson merger deadline again.
– Aon – Willis Towers Watson merger deadline pushed back by EC.
– Aon – Willis Towers Watson merger assessed by Singapore competition authority.
– Aon & Willis Towers Watson merger may face EC statement of objection: Reuters.
– Aon & Willis Towers Watson merger to “significantly lessen competition”.
– Aon & WTW cite alt. capital, disintermediation & marketplaces in defence of merger.
– Aon & Willis Towers Watson reveal leadership of combined company.
– Willis Re divestment seen necessary for Aon – WTW merger to complete.
– If Aon / WTW leads to divestitures, AJG seen as “best fit” for Willis Re: KBW.
– EC investigates Aon / WTW deal, cites competition “concerns”.
– Aon + WTW to “extend proven model of catastrophe bonds” – CEO’s Case & Haley.
– Aon & Willis Towers Watson to merge.
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